Relocating to a new city or town is nothing but a real estate war zone for buyers.
Many people’s dreams are crushed as they are unable to purchase a home.
There is little confidence that couples or single buyers will ever win a bid in the midst of the fire.
Being house poor at any age is not where you want to be especially if you lose it all.
Today I want to talk about relocating to a lower cost of living and if that opportunity is still alive.
- Buying A Home at a young age
- Relocating to save money
- Downsizing is it possible?
Relocating To Canada
As you may know, relocating to Canada from the UK in 2007 just gone 30 years old was a massive move for me.
I sold everything I owned, and the rest went into a shared container travelling by boat to Ontario.
The best part was how the pound was worth more than double in Canada, but that was short-lived.
I’m a risk-taker, and I was pushing the limits but ended up swapping currency at $1.65.
Hey, I learned a lesson.
It was better than nothing, and I still have a few thousand pounds in my UK bank account.
Relocating meant I had to sell my two-bedroom, one-bath house with no basement or garage for top price.
I bought the 600sq ft semi-detached house for $57,000 and sold it five years later for 157,000 pounds.
Yes, it was worth it in many good ways since it helped us become debt-free in 5 years in Canada.
At the time, my ex-girlfriend in the UK got a market value of 30,000 pounds before I renovated.
Basically, I bought her out of the house, and she went on her way.
My dad and I spruced up the paint, gave the garden a haircut and blow-dry and installed a tiny Ikea kitchen.
The woman who owns my home tried to sell it once over the last 16 years, but it didn’t sell.
If she were to sell today, she’d likely have to sell it for less than what she paid me for it.
Interest Rates And Relocating
No one wants to hear that, and unfortunately, this could be the case in Canada if interest rates go up.
Over the past year, housing prices have gone up by 40%, but our incomes have not.
Mrs. CBB said that her physiotherapist just got engaged and married later this year.
The two of them are 27 and 29 years old and worked through University, so they had little debt.
They both have great jobs and live at home in Burlington, Ontario and aren’t sure if they can afford a house.
They are not alone because the dream of having a great career, buying a house and starting a family is dismal.
When our five years closed mortgage interest rate was 4.1 %, we were excited it was so low.
My sister-in-law was in awe of how high the interest rate was for us in 2009.
Odd isn’t how that happens?
Houses in Canada, including townhomes, detached, semi-detached and condos, are so overpriced at the moment it’s all money wars.
House Prices Are Affecting Everyone In Canada
It’s not just one generation that’s exhausted; it’s all generations who are struggling to call a place home.
Homes are selling for hundreds of thousands of dollars overprice in our area with people relocating from Toronto.
For example, A house just came up for sale a street over and listed for 1.4 million dollars.
It’s 2000 sq feet with a larger yard than us and close to the school and other amenities.
Mrs. CBB and I are betting it will sell for $1.6 million, so we’ll have to wait and see.
From what we can tell from the photos, nothing has been updated in the house since it was built.
At the time of purchase in 1995 cost homebuyers in the area between 150k to 250k.
Take it and run has been a laughing joke with the seniors in our area. But where do they go?
Ontario Buyers Removing Conditions From Offers
Some buyers put in massive bids without ever stepping foot in the house with no inspection.
Well, that’s up to you and if you’re willing to pay for any defects with the home.
Home inspectors are losing business because your offer gets thrown into the bin if you add a home inspector as a condition.
Unfortunately, real estate creates pure financial hell for people who need somewhere to live.
A two-bedroom basement apartment in our city goes for $1750 a month plus 30% of the utilities.
How long will this continue because there has to be a point where it ends or collapses?
It happened in the UK, and it can happen in Canada, and it was a dark time for everyone.
I have UK friends who will never own a house based on poor financial choices in their younger years.
They are called life-long renters, where the homeowner gets rich, and the renter pays the bills.
Granted, we do know a single man who loves renting and plans to rent forever because it’s stress-free.
Relocating Just To Afford Housing Costs
Our neighbours, for example, moved from Toronto so they could buy a cheaper home and even then, they bought high.
They are two working adults in their 30’s with no kids, and they were up against 25 other potential buyers.
The only reason they won the bid was not for the offer but for writing a buyer’s letter to the homeowner.
Our friends who owned the house told us the new owners had to get financial help with the downpayment from their parents.
The neighbour on the right of us was a hoarder, and she sold her house for $700,000 to those people who buy homes for cash.
They turned around and sold the house so fast for $750,000 as is, and the paperwork went right into the buyer’s name.
If they fix it up now that all the hoard is gone, they can turn around and sell it for over one million dollars.
Again, where do they go? In the housing wars for another round? No way, it ain’t happening.
The cash buyer walks away with a tidy profit, although I don’t know all the ins and outs of this type of system in Ontario.
Choosing A Home Or Starting A Family
The husband next door on the left of us drives to Toronto as he works in finance, and with the costs of gas at $1.57 a litre, that’s pricey.
Ontario’s gas prices are expected to rise into the summer, possibly hitting $1.75 to $1.80 a litre.
His wife works from home as a baker sharing her creations on her website, which saves on gas and wear and tear on her vehicle.
They are great neighbours; however, you could hear the tremble in their voices when they talk about relocating outside of downtown Toronto.
Gone are the days of the excitement of first-time homebuyers who win with their offer because it’s not as fun.
When the prices are as high as they are now, homebuyers pray that nothing happens.
Currently, they don’t even know if they can afford to have a child with the extra expenses.
Pre-Budget A Mortgage And The Stress Test
Personally, I don’t think that mortgage interest rates will stay as low are they are forever.
This is another reason I urged my readers to trial a few months of a budget where the rent was a mortgage.
It takes lots of stress away if they could do it with different interest rates going up or down and wiggle room.
A stress test is never a bad thing; it’s probably the best thing you could ever go through before getting the go-ahead to buy.
Related: The Canadian Mortgage Stress Test in 2022
Example from Loans Canada
Let’s say you live in Ontario and have an annual household income of $100,000, and will be putting a $50,000 down payment.
Plus, you were able to qualify for a 2.5% mortgage rate, which has a 5-year term, amortized over 25 years.
How much mortgage would you be able to afford?
According to the CMHC mortgage affordability calculator, you’ll be able to qualify for a home valued up to $637,329* under the 5.25% qualifying rate.
If you’re not ready, keep saving until you can get that 20% down on what you can afford.
There’s never a rush to own a house unless you are homeless, but even then, nothing is guaranteed.
I can’t recall what news I was watching last week, but a woman who lives out of her car buys a gym membership to work out, shower and get ready for work.
She can’t seem to catch a break buying a home as most Canadians feel the burn of sky-high prices.
Then again, this video on TikTok might be the answer to why apartment buildings are not appealing.
I do realize that not all complexes are like this but it’s certainly worth doing some homework before renting.
@_kylene when I tell you this is not the worst of it …… Part 2? #fyp #toronto ♬ Monkeys Spinning Monkeys – Kevin MacLeod & Kevin The Monkey
The only part that wasn’t explained was why she struggled to rent an apartment. Perhaps I missed that part in the news.
The point is, it happens, and no matter where they work, their car is what they call home.
Relocating To Parents Basement
These days you get to choose a roof over your head or moving home to live with parents to have a child.
That’s exactly what friends of ours did who live in our neighbourhood.
The couple relocated from Mississauga to our city to start a family, but the only catch was money.
Fortunately for them, his parents have a bungalow with a basement apartment they moved into.
Years later, they now have three small children and pay a small amount of money to live there.
It almost seems that some people get lucky and are able to get their dream but backwards.
By the way, they are both nearing their 30’s and told us there’s no way they could afford to buy a home with the current pricing situation.
Relocating To A Small Town Is Now Our Dream
There was a time when Mrs. CBB and I considered relocating to a small town to lower our cost of living.
We bought our current home in 2009 for $265,000 with an $85,000 down payment leaving us a mortgage of $180,000.
Our home is 1460sq feet on a lot 31x 132 and a 1000 sq ft unfinished basement in the Greater Toronto Area.
At the time, Mrs. CBB sold the 2100sq ft home she owned with her ex. Relocating to a room rental was her best option.
She didn’t need an apartment or to buy a new home, so a co-worker had a relative looking to rent her basement.
Perfect and she took it.
The prices, however, were far too much for her to justify getting one, so she rented a large basement.
It had a large bedroom, bathroom with shower, laundry, a refrigerator, free wi-fi and use of the upper kitchen.
The price was only $400 a month, which she could handle, and it was a 3-minute drive away from her job.
Overall Thoughts On Relocating To Buy A Home
The housing options were endless during the financial crash in 2008/2009 just after I moved to Canada.
This was the time I said to Mrs. CBB that we needed to hustle and find ourselves a house.
I’m almost certain we looked at over 70 homes until we found the right one at the right price.
If we didn’t have to move today we wouldn’t.
There’s no way I’d put ourselves in debt to buy a slightly larger home.
I do feel for the new home buyers or people making career moves or having to move for their job.
It’s not chump change either it’s hundreds of thousands of dollars to get an extra 500 sq feet and slightly larger property.
As for anyone struggling to buy a house, start thinking about renting if you can’t stay where you are.
It’s better to rent than it is to get in over your head with a mortgage you can’t pay, even if a stress test tells you that you’ll be ok.
Relocating or buying a first home right now is gut-wrenching and I feel for everyone in this position.
Discussion: What are your thoughts about the massive house prices in Canada? Where do you think the cheapest place is to live in Canada? Are there any jobs in your field of work?
Please comment below, and don’t forget to subscribe. No spam.
Get CBB By Email + My Free Emergency Binder Printables!
You’re Almost There!
I’m so excited to have you here but there’s one more easy step in the email verification process.
Final CBB Subscription Verification Step 2:
Go to your email inbox (check your Spam folder if you don’t see an email from me)
Please confirm your subscription to Canadian Budget Binder.
Once you read the email, scroll to the bottom, and click on the red box, “Yes, subscribe me to the Canadian Budget Binder List!”
That’s It, You’ve Done It, You’re In!
I can’t wait to see you on the other side friend.
Let us be part of your debt-freedom journey.